{"id":9752,"date":"2020-01-27T13:46:06","date_gmt":"2020-01-27T13:46:06","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=9752"},"modified":"2020-01-27T13:46:06","modified_gmt":"2020-01-27T13:46:06","slug":"tech-and-communications-services-sectors-how-big-are-these-companies-getting","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=9752","title":{"rendered":"Tech and Communications Services Sectors: How Big Are These Companies Getting ?"},"content":{"rendered":"
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While (thanks to Bespoke) much of the Street and the financial media have picked up on the mega-cap concentration within the SP 500, with the top 5 names now being 17.3% of the SP 500’s total market cap, per Bespoke’s Sector Snaphsot as of Thursday, January 16th, 2020.<\/p>\n

What’s more fascinating to me is the individual stocks weightings within the 11 sectors within the SP 500.<\/p>\n

Looking at the top of the above table provided by IBES by Refinitiv, Apple and Microsoft are 40% of the Technology sector’s<\/strong><\/em> market cap weight. Apple’s EPS and revenue “weight” within the sector is a whopping 26% and 24% respectively.<\/p>\n

Apple’s EPS weight within the Tech sector is still larger by 25% than it’s market cap weight. (Dang…) And nothing is slowing down that market cap growth.<\/p>\n

Microsoft, given its multiple, is a smaller, but still substantial 13.9% and 10.5% respectively.<\/p>\n

Looking at the lower half of the table, the Communication Services<\/strong><\/em> sector – the truly surprising statistic was that AT%T, although a smaller market cap weight than Facebook and Google, sports a 19.6%\u00a0 EPS weight within Communication Services, and a 21.4% revenue weight.<\/p>\n

Summary \/ Conclusion:<\/strong><\/em>\u00a0 This data is only pointed out to readers to highlight the difference between the market cap weights within a sector and the individual stock EPS and revenue weights. For sector ETF buyer’s, the market cap shifts or changes are what matter, but know what’s behind the largest components.<\/p>\n

Per the IBES data this morning (SP 500 Earnings Scorecard), and remember the Communication Services sector was combined with Telco and Technology sectors a few years ago and then spun off into it’s own sector, the combined market cap’s of Tech and Communication Services as of last night are 34.4%, around where Technology peaked as a percentage of the SP 500 market cap in March, 2000.<\/p>\n

A value judgment about the US stock market is not being made with that latest statement, since Apple remains far more reasonably-valued than any of the major Tech components in March, 2000.<\/p>\n

This blog tracks the Top 10 market cap weights within the SP 500, and the last update<\/a> in mid-December ’19 noted that the Top 10 stocks were 23.6% of the SP 500’s market cap at that time.<\/p>\n

Afraid to look now.<\/p>\n

Thanks for reading, My personal email is brianglm@trinityasset.com.<\/p>\n

Thanks to IBES and Tajinder Dhillon for the data boost.<\/p>\n

Look for the regular SP 500 earnings update tonight or tomorrow.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

  While (thanks to Bespoke) much of the Street and the financial media have picked up on the mega-cap concentration…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[90,136,240],"tags":[],"class_list":["post-9752","post","type-post","status-publish","format-standard","hentry","category-apple-aapl","category-att-t","category-top-10-market-cap-weights"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9752","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9752"}],"version-history":[{"count":4,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9752\/revisions"}],"predecessor-version":[{"id":9757,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9752\/revisions\/9757"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9752"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9752"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9752"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}